Apple has been coy in the past about disclosing its sales of Apple TVs. Data has come out in bits and pieces. However, to gain insight into the prospects for an Apple HDTV, it seems timely to estimate how Apple has done with the Apple TV over the years.
When the first generation Apple TV shipped on January 8, 2007, it was met with enthusiasm by early adopters. Even so, it was rather large, ran hot, and there were some difficulties for some customers getting purchases reliably synced back to a Mac. Nevertheless, so it was a great first effort.
The early estimates for the sales were probably optimistic. In October 2008, I used two different methods for estimating the total sales as of that date. In Apple’s press announcement from June 2008, there was the revelation that Apple was selling or renting 50,000 movies per day. With an additional assumptions, and a second method based on estimated retail store sales, I backed out an aggregate estimate of about 400,000 Apple TV’s sold in the first 19 months. Other estimates were much higher, but didn’t publish a methodology.
Image Credit: Apple
This amounts to an average rate of about 21K units per months for 19 months. It’s reasonable to assume that the initial enthusiasm tapered off, but was offset and supported by continued Apple marketing. 21K per month amounts to about 250,000 in calendar 2007.
Apple continued to be coy about sales over the next few years. In order to hit the 400,000 mark in 19 months, Apple must have sold another 250,000 in 2008.
2009 is murky. It’s reasonable to assume that Apple picked up some momentum, and the only reasonable thing to do is figure in some growth based on what we know from 2010’s number and back that into 2009. In the fiscal fourth quarter (July-Sep) of 2010, Apple sold 250,000 units, or 83K/month. On a linear backtrack to 2009, we get 52K/mo * 12 mo = 624K. That suggests iterating to a slightly higher sales per month in 2008, but that’s a 2nd order effect, and I’ll ignore it. (in fact, the whole process has iterative aspects.)
2010 is easier because on Sept 1, 2010, Apple introduced the 2nd generation model with significant improvements and numbers were more forthcoming. The new model could work on its own as a streaming device, and one didn’t have to own a PC or Mac to operate it. As a result, sales took off. Between Sep 1, 2010 and April 2011, Apple sold a million units. Assuming that sales of the original Apple TV had been rising in 2010 and were averaging 50-60K units month we get 60K * 6 in first 6 months + 250K in FYQ4 + 250K/month (2nd gen) * 4 remaining months = 1.6 million total units in CY2010.
Image Credit: Apple
In 2011, Apple was doing much better with Apple TV sales and was happier to talk about them. From this report, it appears that the reference is to the calendar year 2011, reported in January 2012, with record sales (1.4M) in December 2011 and sales totaling 2.8 million. This is an average rate of 233K units/month, similar to the initial burst of sales in 2010 when the 2nd generation model was introduced.
On March 7, 2012 Apple introduced a 3rd generation Apple TV with 1080p output. We don’t have any indication as to whether this propelled sales, so we’ll have to wait and see. It’s probably safe to bet that Apple sold at least 750,000 Apple TVs in the first calendar quarter of 2012 based on the above estimates. With Christmas 2012 sales assumed to be somewhat higher than last year, a rough estimate for the whole year would be 750K/qtr * 3 + 1.7M (4QCY) = 4M for 2012.
Adding these up through just the first calendar quarter of 2012, one gets a total sales to date of 6.3 million units sold of all generations. By the end of 2012, that should be amount to 9.5 million.
Apple TV sales for each calendar year, estimated.
Many of the older first generation units were likely replaced by the new unit for a mere $99, either as an upgrade or because the old one failed for fell out of use. But there are also many customers who likely kept the first generation unit in service. If we assume that only half of all the first generation units are still in use but that close to 100 percent of the 2nd and 3rd generation units are in use, we get 5.4 million units in active use.
Units sold per year that are still in service. Tot = 5.4 million.
A Second Methodology
A given, single methodology should always be supported by a second methodology as a sanity check. Again, this one is based on movie sales. I started with a comment that Peter Oppenheimer made on April 24 that Apple’s iTunes store has generated US$1.9B in revenue, according to the transcript, in the previous quarter.
According to Wikipedia data on iTunes, Apple sold 5 billion songs from Feb 24, 2010 to June 6, 2011. That’s 333M songs/month or 1 billon songs qtr. At an average of $1.29/song, that’s about $1.3B/qtr. That leaves $600 million for TVs shows and movies. If we partition that according to frequency and price, it’s almost a wash on the partitioning. Call it $300M in movies sales per quarter. (Note that that’s about 650K movies/day, a thirteen-fold increase from 2007, cited above.)
N (units) * P (purch/wk/unit) * C ($/purch) * 13 weeks = $300M.
Assuming P = 1, C = $5 (mostly high definition), solving for N, we get 4.6 million units in active use. The formula is sensitive to P. If we drop P from 1 movie rental per week to 0.8 rentals/week, then N goes from 4.6 million to 5.8 million. In any case this is the range of the estimated units in service above and provides some modest confidence that the numbers in the first methodology aren’t totally wacko.
Update: IHS says $320M in 2011. A pleasing confirmation.
A Third Methodology
Others have tried to estimate the total sales. Last week, Jonny Evans estimated a total sales to date of 8 million units of all generations. Independent estimates like that suggest that the analysis here is probably in the ball park.
The reason for this analysis is to size up Apple’s prospects for an Apple HDTV. The growth in sales, as shown in the graph above, since the second generation unit was introduced, looks promising. It’s not surprising that Apple labeled the Apple TV in the early years as a hobby, but it’s also not surprising that Apple would see the recent explosive growth of that product as a potential entry point into a broader product category, the Apple HDTV.
Speculation: The 7-inch iPad
The TMO team thinks that the (rumored) Apple HDTV will be easy to operate with a simple remote. However, if Apple were to also deliver a drop-dead gorgeous iOS app for managing the Apple HDTV, (much like the terrific DIRECTV app) and if it were easy to use on a 7-inch iPad, the use of a family of products, using AirPlay, would be enhanced. Current iOS customers would be delighted to use their device to operate the Apple HDTV, but the syngergistic prospects for the use of a 7-inch iPad could propel both products as well as create new headaches for the competition.
Image Credit: Apple (and concept by Jim Tanous)
To date, much of the analysis of the prospects of an Apple HDTV have been based on speculation about Apple’s prospects for success in disrupting the status quo in the TV industry. Surveys also suggest that current Apple iPhone customers would warm to the idea of an Apple HDTV. However, if Apple TV sales were flat, dismal, and showed little opportunity, one might think that Apple would nevertheless have second thoughts about that venture.
The above methodologies are just educated guesses based on some very sketchy data sources. But I doubt they are off by a factor as big as 2.0. In any methodology like this, there will be refinements and additional analysis. However, the conclusion that the Apple TV is growing in popularity and continus to offer new prospects seems hard to deny.